Correlation Between Palantir Technologies and BYD Company
Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and BYD Company at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Palantir Technologies and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and BYD Company Limited, you can compare the effects of market volatilities on Palantir Technologies and BYD Company and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Palantir Technologies with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and BYD Company.
Diversification Opportunities for Palantir Technologies and BYD Company
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Palantir and BYD is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and Palantir Technologies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Palantir Technologies are associated (or correlated) with BYD Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Limited has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and BYD Company go up and down completely randomly.
Pair Corralation between Palantir Technologies and BYD Company
Assuming the 90 days horizon Palantir Technologies is expected to generate 2.63 times more return on investment than BYD Company. However, Palantir Technologies is 2.63 times more volatile than BYD Company Limited. It trades about 0.41 of its potential returns per unit of risk. BYD Company Limited is currently generating about -0.07 per unit of risk. If you would invest 3,827 in Palantir Technologies on September 1, 2024 and sell it today you would earn a total of 2,507 from holding Palantir Technologies or generate 65.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Palantir Technologies vs. BYD Company Limited
Performance |
| Timeline |
| Palantir Technologies |
| BYD Limited |
Palantir Technologies and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palantir Technologies and BYD Company
The main advantage of trading using opposite Palantir Technologies and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, BYD Company can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BYD Company will offset losses from the drop in BYD Company's long position.| Palantir Technologies vs. SBM OFFSHORE | Palantir Technologies vs. Apollo Medical Holdings | Palantir Technologies vs. IMAGIN MEDICAL INC | Palantir Technologies vs. WT OFFSHORE |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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